By now it’s safe to say COVID-19 has been the strongest force pushing for digitalization in retail that we’ve seen in a long time.
Within weeks, everything suddenly moved online.
iPrice Group and App Annie reported back in September that usage of Android shopping apps in Vietnam grew 43% within only 3 months.
Efforts of eCommerce companies to advocate for online shopping in Southeast Asia paid off overnight.
What’s next then? Now that Vietnamese consumers have installed their shopping apps, and opened their digital accounts, where is the market heading towards and what exciting developments can we expect in 2021 and beyond?
Here are 3 data-driven predictions for the future of Vietnamese eCommerce from Dang Dang Truong, an expert who’s spent the last 3 years researching and working in the industry.
The era of B2B
Vietnam has been the playground of B2C eCommerce giants for a while, but starting from 2020, it is looking more and more like a dreamland for B2B and B2B2C eCommerce as well.
Amid social distancing measurements, suppliers have moved their sales operations online and rapidly redefined their supply chains and fulfilment. Noted examples include agricultural produce supplier Hiep Nong and food processing company Mega Viet who both expanded their distribution channels onto Lazada in 2020.
On the other hand, B2B buyers, especially the mom-and-pop shop owners, who account for 85% of the FMCG retail market in Vietnam, suddenly became much more comfortable with utilizing technology.
These factors combined open up a previously closed door for B2B eCommerce. And that’s why in 2020, B2B eCommerce platforms noted many positive developments.
Telio, claimed to be the first Vietnamese B2B eCommerce platform, who has raised USD $25 million in a Series A round, announced they saw revenue increased by 160% per quarter in 2020.
Vietnamese conglomerate Vingroup launched VinShop, a digital platform offering shop owners a place where they can order directly from suppliers and vendors. VinShop claimed to achieve 30,000 connected vendors after only one month of launching.
Other already-established players in digital payment and social commerce also seem eager to expand their reach to mom-and-pop shops.
All of this is to say, B2B eCommerce looks likely to be the next frontier and the new heated competition of eCommerce in Vietnam.
However, the development might not be all smooth sailing.
B2B eCommerce marketplaces typically promise three supposed benefits: refilling stocks fast and effortlessly, finding and ordering from multiple suppliers easily, and finance.
Although these offers look great on paper, they might not be so attractive to the mom-and-pop store owners in practice. The power to pick and choose their own suppliers and make bargains is hard to give up.
Therefore, determining product market fit will be the primary goal for most B2B eCommerce companies in 2021. Would the answer be continuous and heavy discounts as with B2C eCommerce, or would it be the promise of more customers? Only time will tell.
Cross-border eCommerce to benefit from the pandemic.
Seal Commerce Asia’s Shopify in Asia report shows that in 2020, number of new stores opened by Vietnamese sellers on Shopify is 84% higher than that in 2019.
Amazon also announced that Vietnamese sellers had made more than $1 million worth of sales on the platform, tripling from 2019.
With the pandemic situation not looking much better in Europe and North America at the beginning of 2021, this exponential growth rate seems likely to continue.
Selling cross-border (either through Shopify, Amazon, or through their own platforms) into the West could be an important strategy for Vietnamese businesses in 2021, especially since technology has made cross-border eCommerce increasingly easier.
At the same time, this development is also opening up opportunities for a slew of eCommerce-enabling startups in the country.
Take a look at the Shopify app store, which supplies sellers around the world with third-party apps for their online businesses, you will be surprised to find out how many of the top-ranking apps are coming from startups in ASEAN countries.
There are enablers in store building such as Gempages and EcomSolid, in marketing services such as LitExtension, and in logistics technology such as Parcel Perform.
There are even more similar startups operating off the Shopify store to accommodate the growing class of cross-border sellers.
And 2021 promises to bring things to an even higher level for them.
Social commerce & digital payments finally take over
In Quarter 2, according to iPrice Group and App Annie, the total number of sessions on shopping apps on Android phones in Vietnam has reached 12.7 billion, its highest ever.
This huge increase in shopping app usage is creating opportunities for social commerce and digital payment to flourish.
The two technologies have been key strategies since at least 2019. Every big eCommerce player was trying to reduce cash-on-delivery payments and implement social features to their apps, but not until now that things were sped up significantly.
eCommerce giant Shopee noted an impressive 450 million views for live streamed activities from brands and sellers in Southeast Asia last year. While their competitor Lazada saw a 20-time increase in viewers of their annual LazLive event in 2020.
Also in 2020, digital payment startup VNPay achieved the unicorn status, while their competitor MoMo acquired 10 million new users, doubling their user base within 2020. 2021 has just barely begun but we already witness the opening of two more digital banking services with Cake of Be Group and TNEX of MSB
Expect to see social commerce and digital payment play a central role in Southeast Asian B2C eCommerce in 2021, changing the way consumers in the region approach shopping in general.
By Dang Dang Truong & Ta Nguyen Huong
About the author
Dang Dang Truong has spent the last 3 years researching the eCommerce industry and helping merchants launch their online businesses. He is well-known as a thought leader in the field in Vietnam, his home country, being featured on some of the most major news channels. He is obsessed with data and lets it drive how he does ecommerce and content creation.